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Seansy03
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How can I find out if I can take advantage of the Solar Energy Tax Credit? I have always received a sizable refund after filing.

 
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2 Replies

How can I find out if I can take advantage of the Solar Energy Tax Credit? I have always received a sizable refund after filing.

Read the instructions for Form 5695, Residential Energy Credit (2018) for the Residential Energy Efficient Property Credithttps://www.irs.gov/pub/irs-pdf/i5695.pdf

How can I find out if I can take advantage of the Solar Energy Tax Credit? I have always received a sizable refund after filing.

The Residential Energy Credit appears on line 53 of Schedule 3 (form 1040). This amount and other credits are subtracted from the tax on line 11 on form 1040. So long as the Residential Energy Credit is less than the tax on line 11 (and assuming no other credits), then the Residential Energy Credit will be applied to the current return.

 

If not all of the credit can be used in the current year, then the remainder can be carried over to the next tax year.

 

Note that it does not matter if you get a refund. Most taxpayers get refunds because they have withheld more wages than they owe in tax at the and of the year. The effect of the credit in this case is to reduce the amount of tax due on line 15 on form 1040, so that you will need less of your withholding (line 16 form 1040) to pay the tax (which increases your refund).

 

If the amount of your other tax credits is already larger than the Residential Energy Credit, then you will see no benefit this year, and the Residential Energy Credit will be carried over to next year.

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